ISLAMABAD – International Monetary Fund (IMF) delegation is set to visit Pakistan next month for talks on next tranche under the $7 billion Extended Fund Facility (EFF) programme.
If the negotiations prove successful, Pakistan could receive combined $1.2 billion in fresh IMF financing, providing another major boost to the country’s external financing position.
The talks between Pakistan’s economic team and IMF mission will cover progress under the existing EFF programme, while developments under the Resilience and Sustainability Facility (RSF) aimed at tackling climate-related challenges will also be reviewed.
The government directed relevant ministries to make preparations for the IMF negotiations. The visiting mission will be briefed on progress in implementing the new budget, while Pakistan is also expected to present updates on key structural-reform commitments.
A major focus of the talks will be the government’s efforts to contain circular debt in the power and gas sectors. Officials will brief the IMF on measures being taken to prevent further accumulation of circular debt and meet structural-reform targets.
The privatisation programme will also come under scrutiny, with the government expected to provide an update on progress. The IMF mission will further be briefed on the country’s rising foreign-exchange reserves, as well as the impact of the policy interest rate and inflation on the economy.
The biggest prize remains next loan tranche. Pakistan is expected to receive around $1 billion under the fifth tranche of the current IMF programme, while another $200 million is expected under the climate-focused RSF programme.
Together, the two expected disbursements could take the total new IMF financing to $1.2 billion, provided Pakistan successfully completes the required review and reaches an agreement with the Fund.
Pakistan so far received $4.8 billion under the two programmes, while the country is expected to receive more than $3 billion in additional financing by September next year.
With IMF mission’s arrival now approaching, Islamabad faces another critical economic test. Circular debt, structural reforms, privatisation, inflation, interest rates and foreign-exchange reserves are expected to remain at the centre of negotiations as Pakistan seeks to unlock the next major flow of IMF dollars.
IMF approves $1.2b tranche for Pakistan amid ongoing reform programme
